Jan

10

2011

The customer nations of the A400M military airlifter and EADS have reached a definitive agreement to meet the extra costs of the programme, which will involve an additional contribution of 3.5 billion euros by these countries through an increase in the initial price and export levy facilities for the aircraft. This agreement assures the future of the A400M and ensures the continuity of an important workload for companies in the Andalusian aeronautical sector.

The future of the A400M has now been assured. The seven customer nations of the military airlifter to be assembled in Seville and the aeronautical consortium EADS have reached a definitive agreement to refinance the programme for this aircraft. The funding deal will consist of a 2 billion euro increase over the initial contract price to cover costs and keep the project afloat. After various months of intense negotiations, the customer nations of the A400M (Spain, France, Germany, the United Kingdom, Belgium, Luxembourg and Turkey) have also agreed to an additional contribution of 1.5 billion euros in exchange for a share in future export sales (export levy facilities) for the aircraft, as well as waiving the penalties for the delays which have beset the programme. EADS, meanwhile, has undertaken to relax the terms of payment by the customer nations, initially scheduled to take place prior to the first deliveries from 2010 to 2014. A new payment schedule has been established to reflect the current situation of economic crisis faced by the respective governments.

Essentially, it is a happy ending for all parties involved, but especially for the European aeronautical industry. The company thanked the seven customer nations for their “decisive support” of the A400M programme through this agreement, which assures the future of numerous companies in the European and Spanish sector. This is particularly true in the case of the Andalusian industry, given that the FAL for the A400M is located at San Pablo in Seville and many companies in the region have important workloads and major sources of turnover and employment associated with the programme. The Spanish Ministry of Defence highlighted that the agreement reached with the seven customer nations of the A400M is a major step forward for the programme and that "now it is time for Airbus to fulfil its commitment” to these nations.

The Secretary of State for Defence, Constantino Méndez, pointed out that the agreement reaffirms the confidence the customer nations have in the Spanish industry and “represents a significant effort by these nations to support the programme and agree on a new schedule and technical adjustments to ensure its delivery.” He highlighted that “the amendments to the original contract, which must be approved by each of the customer nations, will share the burden of the price increase and provide a convincing mechanism to guarantee delivery of the aircraft in successive phases.” The signing of the agreement has also been welcomed by companies in the Andalusian sector and trade unions, who considered it to be very positive news for the aeronautical industry with positive repercussions for manufacturing and employment, stabilising a project which is largely carried out in Andalusia and allaying the uncertainty of recent months. The staff of Airbus Military’s factory at San Pablo, Seville also applauded the agreement, with the Chairman of the Workers’ Committee, Manuel Falcón, announcing that the consensus between the countries and the company constitutes “peace of mind” and paves the way to a “clearer future” for its workers. In addition, the President of the Andalusian Regional Government, José Antonio Griñan, highlighted that the A400M programme will now be fully executed despite the situation of international financial crisis. Imminent signature Although an agreement in principle was already reached between the customer nations of the A400M and EADS in March 2010, the deal has taken longer to close than was expected.

The main obstacle was the manner of sharing the burden of the 11 billion euros in extra costs, which were initially expected to total 20 billion euros. The new agreement includes the possibility of reducing the initial order by a maximum of 10 aircraft among the seven partners, which will in principle be distributed between Germany (7) and the United Kingdom (3).

The initial order consisted of 60 aircraft for Germany, 50 for France, 27 for Spain, 25 for the United Kingdom, 10 for Turkey, 7 for Belgium and 1 for Luxembourg.

The nations have agreed that the first delivery will be for France, given that it has the greatest needs in terms of the aircraft's capabilities. According to the schedule established, the first A400M will be delivered to Spain in 2016.

Nonetheless, Andalusia may soon be rewarded for its patience, for it is hoped that the signing of the agreement, which is still pending, will take place in Seville in early 2011 in the presence of the defence ministers of the customer nations and the heads of EADS.

The Spanish Defence Minister, Carme Chacón, made this proposal during the NATO summit in Lisbon last November to her French counterpart, Alain Juppé, who indicated his willingness to hold the signing ceremony in the Andalusian capital in January. This will also coincide with the third flight of one of the A400Ms currently undergoing flight tests.

Series production Following this agreement to assure the programme’s future, the issue yet to be resolved is the date for the start-up of series production. “The A400M flight test programme is making excellent progress and demonstrates the soundness of the project. We are very proud of the achievements so far and are now moving towards the series production by the end of the year,” said Airbus Military’s Managing Director Domingo Ureña after signing the agreement. The company planned to start series production of the A400M some time between late 2010 and early 2011 in order to achieve certification by December 2011 and military certification in late 2012, in time for the first delivery to the French Air Force.

Airbus Military’s plant at San Pablo will have the capacity to manufacture 33 aircraft per year working double shifts when it reaches peak output in 2016, a rate of 2.5 to 3 aircraft per month. Two aircraft will be produced in 2011, increasing each year to 7, 14, 28 and finally 33 aircraft in 2016. The series production of the A400M at San Pablo will involve "hundreds of employees", as well as the jobs deriving from the manufacture of aircraft components such as the horizontal tail plane developed in another plant located at Tablada (Seville) and other components manufactured in the plant at Illescas (Toledo).

Domingo Ureña highlighted that the three test aircraft are currently performing two flights per day and have already completed more than 720 flight hours and over 210 flights. Following the maiden flight of the fourth aircraft which took place in late December, the company has announced that the sixth aircraft, which is currently being built, will make its first flight in the second half of the coming year, while the seventh aircraft will be the first one delivered to France.

The new manager of the San Pablo factory, Jesús Espinosa, confirmed that of the four aircraft which will undergo tests in the coming months, two will remain in Seville and the other two will continue their test flights in Toulouse (France), as was planned from the outset.

Since 2004 promoting the development of the Andalusian Aerospace Cluster supporting all the cluster's stakeholders, as well as to providing subcontractors with the technical resources to ensure a better integration with contractor companies.